As Panama's economy slips, is US policy doing the same?

Whatever happened to Panama? For the American public, it has vanished into journalistic no man's land - just where the Reagan administration wants it.

Reporters who would like an update on the matter from policymakers are politely turned down. ``Why should we set ourselves up for another headline that says `US policy in Panama still failing'?'' a State Department press officer asked good-naturedly.

``Well, then, just one quick question,'' this reporter ventured. ``How did Delvalle get out of Panama and into the United States?''

``None of your business!'' came the prompt reply.

This response, plus other indications from informed sources, suggests that the US used its military facilities in Panama when President-in-hiding Eric Arturo Delvalle slipped in and out of the US from July 10 to 19 for a medical checkup, family matters, and discussions with US officials, including President Reagan.

Mr. Delvalle's low-key visit illustrated that the US is willing to keep recognizing as chief of state a man who cannot function as one and enjoys little popular support. Around the world, however, nations are giving in to reality and have, de facto, resumed normal relations with Panama.

When Delvalle proposed a tour of Central America's four democracies last month to promote his cause, at least one nation, neighboring Costa Rica, would not receive him as president. He canceled the trip.

``We have continuing trade and family relations with Panama,'' says Danilo Jim'enez Veiga, Costa Rican ambassador to the US. ``We were willing to receive him as a distinguished visitor, but we could not honor him as a head of state.''

Juan Sosa, Panamanian ambassador to the US, who supports Delvalle, said the tour was canceled because of problems with two of the countries: the illness of Salvadorean President Jos'e Napole'on Duarte and Guatemala's desire to preserve its neutrality in case the Panamanians took up its offer to mediate their internal political crisis. Since then, Ambassador Sosa says, the Guatemalan diplomatic initiative has all but died. He blames Noriega's people for not showing any interest.

What can the US do? Critics of US policy on Panama acknowledge that there is no easy solution and that easing sanctions would send the wrong signal to military ruler Gen. Manuel Antonio Noriega. But they are concerned that the Reagan administration is willing to let the issue slide into the next administration's lap while General Noriega consolidates power, the economy deteriorates, and tensions build over the Panama Canal.

President Reagan assured Delvalle that isn't the case, Sosa says.

After receiving a clean bill of health in Miami, Delvalle went to New York, where he met with Republican Sen. Alfonse D'Amato and also attended ceremonies for his daughter's conversion to Judaism. He then returned to Panama and back into hiding, a life style he has endured since February, when Noriega's backers fired him. (Delvalle has had eight hideouts to date, Sosa says.)

And now it seems there may be someone else after Delvalle's old job: Noriega.

On July 9, the head of the ruling Revolutionary Democratic Party, R'omulo Escobar Betancourt, was replaced by Carlos Duque, a known business crony of Noriega's. Sosa sees Mr. Duque's selection as a sign that the party may be preparing to nominate Noriega as its candidate for the May 1989 presidential elections. To run for president, Noriega would have to step down as head of the Panamania Defense Forces, though his loyal Strategic Military Council would remain in place. And by holding the presidency, Noriega would hope to boost his legitimacy as ruler, some analysts say.

The longer Noriega holds on to power, the more uncomfortable the US gets over the future of the Panama Canal. A recent meeting of the canal commission - the first since the US-Panama crisis began in February - was pointedly held outside the country, in Savannah, Ga.

Before the meeting, Panamanian President Manuel Sol'is Palma tried to replace one of his countrymen on the nine-member commission, but the US blocked the move. And as Dec. 31, 1989, approaches, the date the US relinquishes the chairmanship of the commission to a Panamanian, smooth relations become increasingly important.

While by all accounts Panama's economy continues to go downhill, a State Department official willing to speak on the economy says there is more cash circulating than would be expected under the circumstances, which could mean that Noriega has put into circulation some money from his alleged drug dealings.

Otherwise, he says, capital flight continues. Inventories are being emptied. People are hoarding goods and eating more locally produced food. Many businesses have been mothballed. Construction is at a virtual standstill.

A recent fact-finding mission to Panama led by Patrick Lucey, former US ambassador to Mexico, reported that the US sanctions have been toughest on Panama's middle class, the heart of Panamanian support for a return to democracy. Panama is being forced into the arms of Cuba and Nicaragua, he said, and US economic competitors such as Japan are taking up some of the slack in commercial ties. Mr. Lucey called on Reagan to appoint a special envoy to Panama to focus on the situation - someone ``who has no stake in justifying continuation of the current policy.''

Allen Weinstein, a mediation specialist who, at the behest of Guatemala, had begun to lay the groundwork for intra-Panamanian talks, echoes Lucey's theme. The time has come, he says, for the Reagan administration to appoint a special commission that would assess US national interests and make recommendations. ``It wouldn't be an excuse to stall,'' he says, if you were to ``give it a short fuse - say 30 to 60 days.''

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